01 A Sad Story
Recently, a friend came to consult me about an issue, and I found out that it was a sad story after listening to it.
He met an online friend, and from time to time, the friend would ask him if he wanted to buy "oil". At first, he thought the friend was in the oil business, but later realized something was amiss when the friend would get excited every evening and post some strange pictures on his social media, claiming that they had increased by ten times. Sometimes it was a frog, sometimes a mouse. It was only later that he realized the friend was actually involved in virtual currency trading as a side business, and the "oil" referred to USDT within the circle.
After being persuaded by the friend, he thought investing in virtual currency was a good business and started his own virtual currency investment career under the guidance of this enthusiastic friend. As those in the coin circle know, depositing and withdrawing funds is a hassle, and every time he bought "oil", it was a big problem. Fortunately, this friend was very helpful and always helped him solve the "oil" problem. Their relationship grew stronger, and the investment grew larger, until he asked the friend to purchase tens of thousands of USDT for him. However, when he tried to transfer the USDT from his account to another wallet, he realized something was wrong. It was then that he discovered that the "U" he bought seemed to be a bit off.
As you might have guessed, he had bought fake USDT.
02 Counterfeit Leading the Coin Circle
USDT, as a virtual currency pegged to the US dollar, is known as a stablecoin, and its price is basically consistent with the US dollar. The issuer of USDT is Tether, which claims that each USDT is backed by 100% reserves, meaning that for every USDT issued, there is one US dollar or equivalent held in Tether's accounts.
USDT has brought great convenience to those in the coin circle, serving as a bridge between the virtual currency and fiat currency worlds, providing a stable value storage tool in the blockchain world and greatly reducing the risk of virtual currency price fluctuations. According to public data, as of December 2023, the market value of USDT has reached a staggering $91 billion.
However, with the popularity of USDT, the issue of counterfeit USDT has emerged, as described at the beginning of this article. Counterfeit USDT typically refers to imitations that have no affiliation with Tether. So, how are counterfeit USDT produced and circulated? How can they be identified and prevented? In this article, we will discuss these topics.
03 Common Scenarios of Counterfeit USDT
The process of making counterfeit USDT is not complicated, and the scam methods are familiar. Based on the counterfeit USDT scams we have encountered, there are mainly several types:
1. Forging Tether's official website or application.
Some criminals will use Tether's name to create websites or applications that are similar or identical to Tether's, and then promote and publicize them through various channels to deceive investors into buying or exchanging USDT on their platforms. These websites or applications often offer discounts or rewards to attract investors' interest. However, these websites or applications have no relationship with Tether, and the USDT they issue is naturally fake.
For example, in May 2021, the Ningxiang Public Security Bureau received a report from a Mr. Li, who met someone with the ID "selling a large amount of U" through a chat app. The person claimed to have a large amount of USDT for sale at a low price, supporting on-site transactions and coin verification. Two days later, Mr. Li met with two individuals at a large shopping mall in Ningxiang to trade. The individuals opened a digital wallet app on their phones, showing a large amount of "U coins" in the wallet and claimed to conduct "U coin" transfers within the app. After Mr. Li transferred 200,000 yuan as agreed, the other party left for various reasons. According to the criminal suspect, the "U coins" they had were created virtually through a digital wallet app, allowing them to control the quantity and create fake transfer interfaces in the background.
2. Forging USDT contract addresses or token identifiers.
Some criminals will use the characteristics of virtual currency technology to create contract addresses or token identifiers similar to or the same as USDT, and then distribute and trade them through various channels. These contract addresses or token identifiers are difficult for non-professionals to distinguish, and the story at the beginning of this article used this deception method.
3. Using intermediary platforms or individuals for transfers or transactions.
Some criminals will use intermediary platforms or individuals, such as exchanges, wallets, or agents, to conduct transfers or transactions. These intermediary platforms or individuals often claim to have a large inventory of USDT for sale or exchange at a low price. However, these intermediary platforms or individuals do not actually have the USDT they claim to have, and once you pay a large amount of funds to them, they will immediately disappear.
For example, in a case in Jilin Province (Case No. 2021 Ji 01 Criminal Final 143), the defendant Zhang and Zheng met on a blind date website and engaged in USDT trading together. At the end of July 2020, the victims Dong and Yan met Zheng, who was selling USDT online, claiming to be 50 cents cheaper than the market price. The two decided to purchase USDT from Zheng. On August 2, 2020, Zhang showed the quantity of USDT in his mobile wallet at a hotel and successfully completed several small transactions as directed by Zhang. Later, Dong and Yan had a friend, Huang, transfer 1.29 million yuan in two installments to an account provided by Zheng under the name Tangchang, to purchase 200,000 USDT. Zhang pretended to transfer the USDT using his phone, but after a long wait, he falsely claimed that there might be a blockchain confirmation issue and calmed the other party down, then received instructions from Zheng to escape, using the opportunity to leave the scene and leave Changchun.
04 How to Prevent Scams?
Knowing the common tricks means being able to counter them. As a newcomer to the coin circle, if you need to purchase USDT for some reason, you should pay attention to the following anti-scam measures.
The official website of Tether is https://tether.to/, and the official application is Tether Wallet. If someone tries to persuade you that Tether has opened an online store with discounted prices, you should confidently block them immediately. Any claims of cooperation with Tether but with links or applications that do not match the official channels are likely to be scams.
Ordinary individuals should try to choose mainstream virtual currency exchanges with legal licenses and good reputations overseas to trade USDT within the exchange. Do not believe scammers who ask for your WeChat or Telegram contact information and then cancel the order for a private transaction. If something goes wrong, you won't be able to find them. Just because you have the scammer's WeChat ID doesn't mean you can find the real person behind it, as they usually acquire these WeChat IDs from others.
Verify the USDT contract address. If you are purchasing a large amount of USDT, you can check the USDT contract address on a blockchain explorer to confirm its authenticity and also check for any suspicious addresses or transactions to avoid trading counterfeit USDT.
Watch out for abnormal prices. If the price of USDT on a platform or channel differs significantly from the market price, especially if it is much lower than the market price, it is likely to be fake or counterfeit, so be cautious.
Use your own downloaded or exchange-provided address for receiving payments to avoid using a recommended counterfeit wallet application.
Learn more about blockchain virtual currency technology and legal knowledge, such as by following the WeChat public account of Lawyer Honglin, as knowledge is power.
05 Conclusion
Many friends in the coin circle jokingly say that the current stage of the virtual currency industry is like a dark forest, where project parties want to harvest you, unreliable exchanges want to harvest you, and online friends with various attractive personas are also eyeing your not-so-wealthy wallet. This generation of players is really struggling. It is likely that the battle for the security of digital assets will continue in the industry for many years, and I hope this article can help you win that battle.
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